PRENUPTIAL AGREEMENTS — SHOULD YOU SIGN ONE?

Wedding planning has begun.
You’re nervous, a little scared, but excited to begin a new life with your partner. Then someone asks “will you sign a prenuptial agreement?” This is where opinions get divided, and voices get heated.

Should you make and sign a prenuptial agreement? Prenups receive a lot of buzz, with opinions divided on them. For some people, the very thought of a prenup equals planning a marriage to fail. For other people, it is a wise decision that protects your interests during the marriage in the event that the marriage ends.

So, are prenups actually useful and necessary? Or are they just a means that rich people use to avoid sharing their assets? Can ordinary people use and benefit from them? This article aims to shed light on what prenups are and why they are used.

What is a Prenuptial Agreement?

A prenuptial agreement is an agreement made by a couple before they get married. It usually details the assets that are owned by each of them and shows how those assets and other assets should be distributed in the event that the marriage ends, whether through divorce or through death.

It outlines and provides guidance as to the status, use, ownership and division of current and future assets and liabilities between them.

When Are Prenups Necessary?

While different people have different reasons for creating prenups, these are some situations where people feel like prenups are necessary:

1. When one or both parties have children from a previous marriage/relationship. When there is a child from previous relationships, how will the child be supported and with what income? This is an issue that some couples address using a prenup especially necessary when the child has special needs or has a condition that would require care and attention beyond the death of the child’s parent or the dissolution of the marriage.
2. When one person has a significant amount of debt. How will the debt be managed? Who is responsible for paying off that debt? If both commit to paying it off, what happens if they get divorced or one dies? Also, how do the agreed upon debt repayments affect contributions toward future acquisitions of assets in the course of the marriage? A prenup helps the couple with a clear plan on how to tackle such debts in a way that works for them. If one person has to pay a significant amount of debt while the other does not, how will they contribute to the acquisition of assets after marriage? In equal proportions? Will the partner with debt pay less? Creating a prenup helps persons in such situations to think through and agree on a plan for the financial future of their marriage.
3. Salary disparity among spouses. In a situation where a person earns significantly more than their spouse, how will the partners contribute towards the acquisition of assets in the marriage? And when one person contributes significantly more than the other, how should the assets be distributed in the event of a divorce? Equally? Or in the proportion of which the partners made the contribution? A prenup helps outline the proportions agreed upon for the acquisition and division (in the event of a divorce) of marital property.
4. To protect assets that each partner owned before the marriage. Most people create prenups to protect assets, businesses and interests that they owned prior to marriage.
5. When the parties intend to acquire an asset or start a business after marriage that would be owned by both parties but would be acquired with funds from one party only. This can become complicated quickly, especially in the event of a divorce or death and making clear provisions for it in a prenup provides clarity.
6. Inheritance and/or Windfalls. In a scenario where one party inherits an inheritance or a large windfall such as an insurance payout, royalties or a severance package, should it be considered as belonging to both parties or only one? Should the marriage end in divorce or death, should the windfall be distributed between both parties or it should remain the property of the party who received it?

Things To Note

When preparing a prenuptial agreement, it is important to note a few things including the following:

1. Each party should be independently advised by a lawyer. It is important that each party understand the implication of the document before they sign it.
2. Each party should disclose all assets and liabilities that they own. It is only when there is total transparency that the parties can achieve their aims.
3. The agreement should not be contrary to the laws of the country.

The Position of Ghanaian Law on Marital Property

In Ghana, the assets that are distributed between the parties are marital property only. The Ghanaian courts have defined marital assets as “property acquired by the spouses during the marriage, irrespective of whether the other spouse has made a contribution to its acquisition.”

Basically, whether property is acquired with funds provided by one person or both parties, as long as it was acquired during a marriage, it will be considered as marital property that belongs jointly to both parties. This is reinforced by article 22(3) of the 1992 Constitution that provides that

(a) spouses shall have equal access to property jointly acquired during marriage;

(b) assets which are jointly acquired during marriage shall be distributed equitably between the spouses upon dissolution of the marriage

Under Ghanaian law, a person does not need to prove that they contributed financially to the assets of a marriage. Actions that maintain a congenial domestic environment such as cooking, cleaning and caring for children are considered as contributions that entitle a person to ownership of marital property.

This means that in Ghana, assets that a person acquired before they get married are usually considered to be personal assets and would not be regarded as marital property which both parties are entitled to. Thus, personal assets that were acquired before marriage are protected.

Are Prenups Needed under Ghanaian Law/

It would appear that if the law in Ghana protects the individual assets that a person owned before marriage, then there is no need to sign a prenuptial agreement. While it is true that for those whose primary aim is to protect assets they owned prior to marriage, a prenup may not be necessary, there are many reasons to create a prenup beside protecting personal assets.

The default of the Ghanaian courts would be to declare that assets that are acquired in the course of a marriage as marital property. If the couple can show evidence that they did not intend to jointly own assets that are acquired after marriage, the courts will take it into consideration.

Thus for persons who are about to enter marriage but plan to acquire and own assets individually and not jointly, a prenup would be useful to show the courts that the assets are individually owned, should a divorce of death occur.

Again, when a divorce occurs, the courts usually make provisions for custody and maintenance of children of the marriage, not children from previous marriages. If the couple has an agreement to care for children from previous marriages with marital assets, a prenup would help the courts decide when making provision in respect of such children.

Should you Sign One?

Generally, prenups are recommended for people who have children from previous marriages, dependents such as parents or siblings who they intend to care for or who need continual care, or people who bring significant assets or debt into the marriage. Every situation differs. However, regardless of whether you decide to sign a prenup or not, it is highly advisable that you have an in depth discussion with your potential spouse to discuss where you both are financially, and what your financial goals and plans are.

Should you decide to reduce your discussion into a written form, this will aid the courts in the event of a divorce or death. As long as the agreement is fair, reasonable and each party received independent legal advice, there is a high likelihood of it being accepted by the courts.

And for those who worry that a prenup means you are planning the end of your marriage before it begins, please remember the adage, “hope for the best, prepare for the worst”.